Explanations why payment-related fintech providers in Indonesia must be registered at Bank of Indonesia.
Cashless payment service providers in Indonesia must now get ready for stricter regulation. The government released a new regulation in 2017 about fintech in Indonesia regarding mandatory registration. The regulation followed a breakthrough by Bank of Indonesia (BI) regarding of security, risk mitigation, and consumer protection.
Regulation and Steps for Registration
According to PBI (Bank of Indonesia Regulation) Number 19/12/PBI/Year 2017, all fintech service providers are required to register their businesses to BI. The registration aims to create an information database about the companies in Indonesia, which are necessary for risk mitigations and consumer protections. There are exceptions for fintech providers that had registered to BI before the release of regulation.
New fintech service providers can register by downloading all the forms in the official website of BI. To find the link, visit the website (Bi.go.id), choose the English version, click Payment System section, and go to the registration page in Financial Technology. There is also an email address where the completed forms can be sent.
Registered fintech service providers don’t need to register again, but they need to inform BI about their current information. The form is available for download on the same page but under a different section. There is also an email address where the completed forms must be sent.
Why BI Requires Fintech Providers Registration
BI’s new regulation for registration was the follow up for the institution’s new branch: Bank Indonesia Fintech Office. Formed in November 2016, this office is the center of assessment, risk mitigation, and evaluation toward fintech products and services. The office also serves as a research center for development of healthy, robust fintech industry.
The new registration is the formalization of the government’s efforts to create better legal protection for fintech customers. There are several goals that the government is trying to achieve with the regulation, which are:
· Creating fintech database and map
Development and risk mitigation efforts in fintech industry require complete data and map of the products, services, and providers. Registration gives BI the data they need to map Indonesia’s fintech potentials and detect risks in various aspects.
· Sources of review and feedback
As a formal state-owned financial institution, BI has a responsibility to monitor and review the development of financial industries, including fintech. BI can also use the acquired data and information as feedback sources, to keep up with the fast-growing industry development and make the best future decisions.
· Creating a legal base for regulatory sandbox
Regulatory sandbox is the way BI can see the potentials of new startups before they are launched. The regulation and new office create a standard regulatory sandbox to review new fintech startups, making sure that only the most feasible and well-planned startups get launched to the public.
· Protecting the customers
Fintech is a fast-growing industry, and many members of public need more protections against threats such as cyber attacks and thefts in transactions. Regulation ensures that fintech companies serve the customers within the legal boundaries. The database makes it easy for BI to detect shady practices by certain fintech service providers, and act accordingly.
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